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In August, HUD has announced even more policy & procedural changes that will be established upon implementation of their 4000.1 Handbook. The good news is that most of the proposed changes outlined in this Notice will have an effective date of March 14, 2016 instead of the September 14, 2015 effective date established for most other portions of this Handbook.
The eligibility, approval and re-certification requirements for 203(k) Consultants, Direct Endorsement (DE) Underwriters and Nonprofits & Governmental Entities were the primary focus of the new portions of the 4000.1 Handbook.
Specifically for DE Underwriters, HUD has provided detailed experience criteria that lenders must certify when registering an Underwriter in FHA Connection for their Firm. Also, lenders must continue to certify as to an Underwriter’s compliance with the eligibility criteria on an annual basis.
HUD has reminded lenders that the DE Underwriter must be a full-time employee of a single Mortgagee and be authorized to bind the Mortgagee in matters involving origination of mortgages. DE Underwriters must not have dual employment or Conflicts of Interest.
For prospective 203(k) Consultants – they will continue to be required to submit applications to be placed on the Consultant Roster to the jurisdictional Homeownership Center. Approved Consultants will then be provided with a unique Consultant Identification number and be required to re-certify that they continue to be in compliance with all laws, regulations and licensing requirements every two years.
What is noticeably absent from the new requirements is any form of testing requirement – either at the time of initial approval or when re-certifying. HUD/FHA used to require Appraisers to pass a test on FHA appraisal protocols prior to being placed on the Roster but eliminated this mandate since the consensus opinion was that they must pass a test to obtain their appraisal license & that test should be sufficient.
Loading ...Another disappointment with the proposed changes is that HUD continues to delegate responsibility for approval of DE Underwriters to lenders. There are many well-qualified Underwriters that currently work for Quality Control firms that cannot obtain their DE approval since they must work for an FHA-approved lender in order to obtain a DE number.
In fact, I have known several such individuals who gave up their employment with a QC Firm in order to work for a lender & obtain their DE number. HUD could resolve this situation by allowing such individuals the opportunity to apply to one of the Homeownership Centers (HOCs) to obtain their DE approval. I know that HUD is concerned about having sufficient resources to be able to process such applications, but I do not believe that this policy change would result in a substantial workload increase for the HOCs.
Just a thought!
